Section 5.15 Between Deeds of Trust and Mechanic's Liens

• Library: Creditors' Remedies (2009 Ed. + 2014 Supp)

B. (§5.15) Between Deeds of Trust and Mechanic's Liens

The issue of priority between mechanic's liens and deeds of trust is troublesome. For an in-depth discussion, see Thomas B. Becker and Dana Hockensmith, Comment, Mechanic's Liens—Priority Over Mortgages and Deeds of Trust, 42 MO. L. REV. 53 (1977).

Deed of Trust Recorded Before Work Commenced. Section 429.050, RSMo 2000, defines the rules of priority when a deed of trust is given and recorded before the construction begins. In general, the statute provides that the subsequent lien claimant, as a matter of law, obtains a prior and superior interest in the "improvement[ ]." The deed of trust holder retains a superior interest in the land. See II MO. CONSTRUCTION LAW §9.95 (MoBar 2^nd ed. 2004); Union Elec. Co. v. Clayton Ctr. Ltd., 634 S.W.2d 261 (Mo. App. E.D. 1982). Also, when a deed of trust secures an indebtedness for purchase of land and construction of new improvements, the court held that the deed of trust had priority as to the land but not the improvements over a subsequently recorded mechanic's lien. Westinghouse Elec. Co. v. Vann Realty Co., 568 S.W.2d 777 (Mo. banc 1978).

Section 429.050 further provides that, when the property is subject to a deed of trust having priority on the land only, the lien claimant may have the improvement sold under execution, and the purchaser may remove the improvement. Union Elec. Co., 634 S.W.2d 261. The removal right does not extend to sidewalks. Section 429.050. Also, the court may not, even in an equitable proceeding, decree that the building and land be sold together with the proceeds of sale apportioned between a mechanic's lienor who had priority as to the building and a mortgagee who had priority as to the land. This is on the ground that the effect of the decree would be to cause a premature and compulsory foreclosure, without statutory authority, of a mortgage not due. Gold Lumber Co. v. Baker, 36 S.W.2d 130 (Mo. App. W.D. 1931). As another restriction to the removal right, the courts have barred lien claimants' removal efforts when they concerned improvements provided under a contract with a lessee or licensee rather than the holder of a fee simple interest. In this instance, the lien claimant must prove the economic benefit to the property by the removal and assure the court that the leased or licensed premises will not be damaged in the removal process. See § 429.070, RSMo 2000; II MO. CONSTRUCTION LAW ch. 9. As a practical matter, there would seem...